Epidemiological studies show an increased incidence of type 2 diabetes in humans who were growth retarded at birth. The mechanisms by which an abnormal intrauterine milieu leads to the development of diabetes in adulthood are not known. We have developed a model of fetal growth retardation, designated as IUGR (intrauterine growth retarded), in the rodent, induced by bilateral uterine artery ligation. IUGR rodents develop diabetes with a phenotype similar to that observed in the human with type 2 diabetes: progressive dysfunction in insulin secretion and insulin action. Most importantly, IUGR rodents exhibit a progressive decline in beta-cell mass associated with decrease b-cell proliferation and an early reduction in expression of PDX, a pancreatic homeobox transcription factor that functions as a master regulator of pancreas development and beta-cell differentiation. Administration of a pancreatic beta-cell trophic factor, Exendin-4 (Ex-4), during the neonatal period completely prevents the development of adult-onset diabetes in this model, indicating that exposure to Ex-4 in the newborn period reverses the adverse consequences of fetal programming. In the IUGR rat, Ex-4 stimulates beta-cell proliferation, restores PDX expression to normal levels, and prevents the decline in beta-cell mass. We hypothesize that reduced PDX-1 transcription is the primary cause of impaired beta-cell neogenesis and proliferation, which leads to the progressive loss of beta-cell mass and the subsequence development of diabetes in IUGR rats. Further we hypothesize that Ex-4 prevents the development of diabetes largely due to its ability to normalize PDX-1 expression. Experimental testing of these hypotheses is detailed in the following Specific Aims: (1) Establish that reduced PDX-1 expression causes the progressive loss of beta-mass in IUGR animals, (2) Determine whether Ex-4 prevents the deterioration of beta-cell mass in IUGR rodents by enhancing b-cell neogenesis and proliferation, and/or decreasing cell death, (3) Determine whether Ex-4 treatment normalizes PDX-1 promoter activity in IUGR PDX-1 LacZ reporter mice, and (4) Determine whether Ex-4 treatment improves glucose tolerance in IUGR rodents through a direct action on the b cell. These aims, achievable through the studies proposed here, are critical in laying the groundwork for future hypothesis development and testing regarding the role of the beta-cell in diabetes.